Episode 82: WiseTech Debacle, Cettire Disaster, Seek's Acquisition Stumbles and the World's Most Profitable Companies
The guys chat about the ongoing dramas at the $30B WiseTech, Cettire's disastrous results, Seek's acquisition fiasco, and who are the world's most profitable companies.
The Contrarians catchup
Adam starts the episode by saying, “To give listeners a heads up: don't turn off for the next hour and a half or however long we go for, because this could be one of the all-time great episodes of The Contrarians, I suspect.”
Adir’s latest book recommendations: ‘How to Cure a Fanatic’ by Amos Oz, and ‘Gratitude’ by Oliver Sacks (based on how it feels).
The guys spend a few minutes arguing over the definition of the word ‘externality’.
Adir encourages listeners to support local bookstores rather than seeking the convenience of Amazon, but Adam sees that as “keeping an uncommercial business in business to give a discount to people who want to shop at the bookstore.”
Adam: “You look at reviews on TripAdvisor and Google and often the really high-profile restaurants are actually more like a 4.2 or 4.3 because they get so many reviews and the expectations are very high. So to get a 4.8, 4.9, you almost have to be a really good value restaurant.”
Adam is off to the Melbourne Fashion Festival this week, personally dressed by Christian Kimber, one of the hottest young designers on the runway.
Chadstone Shopping Centre will start charging for parking around their new fresh food section.
Top 10 market cap businesses
Adam quizzed Adir on the 10 largest companies in the US by market cap. For those playing at home, here are the answers:
Apple - $3.4T
Nvidia - $3.3T
Microsoft - $3.1T
Amazon - $2.5T
Alphabet - $2.3T
Meta - $1.8T
Tesla - $1.1T
Broadcom - $1.1T
Berkshire Hathaway - $1T
Walmart - $827B
And the top 10 in Europe and the UK (to pad out this newsletter):
Novo Nordisk - $389B
LVMH - $359B
SAP - $333B
Hermes - $303B
ASML - $293B
Accenture - $242B
AstraZeneca - $225B
Linde - $219B
Shell - $200B
L’Oreal - $195B
WiseTech debacle is black and White
In a remarkable development at WiseTech, “a leading developer and provider of software solutions that put productivity at the centre of the world's supply chains”, founder and former CEO, Richard White is back as Executive Chairman after being fired because of an inappropriate relationship with a staff member. Upon White’s return, four independent directors on the board quit en masse.
WiseTech’s share price promptly fell 24% and is down 28% in the last month. This podcast named WiseTech as one of the most overvalued companies on the ASX last October - the share price is down 33% since then.
Adir: “If you buy this company, you're buying Richard White. I mean, it's his company. But ultimately where this business will settle is, the true believers in the genius of Richard White will be the people that end up owning this company. And they'll be right or they'll be wrong. I don't make any ethical comments about his behaviour or whatever, but they'll decide we wanna invest in him because we think this business has got huge potential.”
Adam: “I will disagree with that. I think you've glossed over a couple of points here. This guy's 70 years old. So leaving aside his proclivities, and he clearly hasn't lost his fitness based on what he's gotten up to, but this is a 70 year old dude past his peak.”
Seek's acquisition stumbles
Adir penned an article in the AFR this week titled ‘A strange twist turned Seek’s pursuit of Xref into a cul-de-sac’. Xref is reference check software, allowing a company to “get feedback across the entire talent journey”.
Adam: “Can I go back to first principles for a second? What is a reference check business? It seems like a business trying to solve a problem doesn't really exist.”
Cettire disaster/Adam’s masterstroke
Adam: “My favourite company and friend of the pod, Cettire, last week announced their December financials, and it's fair to say they weren't too well received. Cettire shares are down 80% in the past year and 54% since I said it was the best short I've ever seen.”
Cettire reported an 11% increase in revenue and a drop in marketing spend of 12%, but gross margins are down to 18%, and profit has taken a hit because they were erroneously claiming an R&D incentive from the government.
Adir: “I don't even think you need any conspiracy theories on this business. It's worth a ton of money for a business that we don't really think is worth that much.”
Adam: “This is probably a $50M business, maybe. It's worth something, I would have thought. But it was worth $2B at one point. This is, to me, makes a fool of the ASX to be honest. They're sitting there with some egg on their face.”
Five other stories worth following:
For the first time, a private lunar lander sticks the landing on the moon. Firefly Aerospace, a 10-year-old startup based in Texas, became the first private company to get a lunar lander on the moon without it tipping over or crashing.
Skype, once the preeminent video-calling service, is going to internet heaven in May. Parent company Microsoft is shelving it to focus on its Teams product.
President Donald Trump offered more clarity on a US Crypto Reserve yesterday, saying in a post to Truth Social that his administration is moving forward with the plan and the stash will include bitcoin, ethereum, and the smaller tokens solana, XRP, and cardano.
The world’s biggest food-and-drink chain is not McDonald’s or Starbucks - it’s Mixue Ice Cream and Tea, which has 45,000 locations, primarily in China and Australia. The China-based company raised $444 million in an IPO and saw its shares jump over 40% in trading in Hong Kong today.
Apple's plans for a completely revamped AI-powered Siri have been pushed back, with employees now believing the assistant won't be fully modernised until 2027.